Fairness opinions › Outsourced Services › 2024

Cross Country Healthcare acquired by Aya Healthcare: fairness opinion by BofA Securities

Announced December 3, 2024 · One-step merger · All cash · DEFM14A filed January 22, 2025

Outsourced Services Staffing

Enterprise value

$615M

equity $615M

EV / LTM EBITDA

12.1x

EBITDA $51.0M · 4% margin

EV / LTM revenue

0.46x

revenue $1.3B

DCF discount rate

9.8%–11.8%

Perpetuity growth

Deal terms

ConsiderationAll cash

Price per share$18.61

Premium61.6%

Premium basis$11.52 closing price on December 2, 2024, the day prior to the last trading day before announcement

StructureOne-step merger

Termination fee$20.0M

Reverse termination fee$20.0M

Go-shopNone

Outside date—

FilingDEFM14A · EDGAR index

Implied value per share by method vs. $18.61 offer

Selected companies — EV / 2024E Adjusted EBITDA $9.20 – $13.05

Selected companies — EV / 2025E Adjusted EBITDA $12.65 – $18.25

Precedent transactions — EV / LTM EBITDA $12.70 – $15.85

Discounted cash flow $12.05 – $17.55

52-Week Trading Range $9.81 – $23.52

Six-Month Trading Range $9.81 – $18.24

Wall Street Analysts' Price Targets $10.85 – $17.15

Premia Calculations $14.40 – $17.85

Ranges as disclosed in the banker’s summary of analyses; the red line marks the per-share consideration.

Opinion of BofA Securities to the target board

Delivered December 3, 2024 · Fee $10.0M ($8.0M contingent on closing), $2.0M on delivery of the opinion

Discounted cash flow assumptions

Discount rate9.8%–11.8%

BasisEstimate of Cross Country's weighted average cost of capital derived using the capital asset pricing model

Terminal valuePerpetuity growth

Perpetuity growth3.0%–4.0%

Exit multiple—

Projection period2025E-2029E

Projections usedCross Country management financial projections

Implied value per share$12.05–$17.55

Unlevered free cash flows from January 1, 2025 through December 31, 2029 discounted to December 31, 2024 using mid-year convention; net cash at closing added and divided by fully diluted shares.

Selected public companies (1)

AMN Healthcare Services, Inc. (AMN)

Multiple	Peer low	Peer median	Peer high	Range applied	Implied per share
EV / 2024E Adjusted EBITDA	6.6x	6.6x	6.6x	5.0x–7.5x	$9.20–$13.05
EV / 2025E Adjusted EBITDA	9.2x	9.2x	9.2x	7.0x–10.5x	$12.65–$18.25
EV / NTM Adjusted EBITDA (AMN historical averages: 10-yr 10.4x, 5-yr 10.4x, 3-yr 8.8x, 2-yr 9.0x, 1-yr 9.8x, YTD 9.9x, Dec 2 2024 9.1x; Cross Country: 10-yr 10.6x, 5-yr pre-COVID 12.0x, 5-yr 9.3x, COVID 12.7x, post-COVID 9.0x, 3-yr 6.6x, 2-yr 7.1x, 1-yr 7.9x, YTD 7.9x, Dec 2 2024 6.7x)	8.8x	—	12.6x	—	—

Selected precedent transactions (10)

Date	Target	Acquirer	Multiple
2024-07-29	Soliant Health, Inc.	The Vistria Group, LP	—
2021-08-30	Medical Solutions L.L.C.	Centerbridge Partners, L.P. / Caisse de Dépôt et Placement du Québec	—
2021-07-01	Oxford Global Resources, LLC	H.I.G. Capital, LLC	—
2019-11-05	Soliant Health, Inc.	Olympus Partners, L.P.	—
2019-04-30	Advanced Medical Personnel Services, Inc.	AMN	—
2018-04-09	MedPartners HIM, LLC	AMN	—
2018-02-09	Professional Placement Resources, LLC	Medical Solutions L.L.C.	—
2017-05-08	Medical Solutions L.L.C.	TPG Growth LLC	—
2015-11-17	B. E. Smith, Inc.	AMN	—
2010-07-28	Nursefinders, Inc.	AMN	—

Multiple	Low	Median	High	Range applied	Implied per share
EV / LTM EBITDA	8.9x	11.0x	11.5x	9.0x–11.5x	$12.70–$15.85

Other analyses

Analysis	Summary	Implied per share
52-Week Trading Range	Trading range of Cross Country common stock for the 52-week period ended December 2, 2024.	$9.81–$23.52
Six-Month Trading Range	Trading range of Cross Country common stock for the six-month period ended December 2, 2024.	$9.81–$18.24
Wall Street Analysts' Price Targets	Publicly available equity research analyst price targets, presented as present values discounted by one year at an estimated mid-point cost of equity of 10.75% derived using CAPM.	$10.85–$17.15
Premia Calculations	Premia paid in all-cash acquisitions of U.S. public company targets announced since January 1, 2014 with disclosed enterprise value between $500 million and $1.5 billion; applied an illustrative premia reference range of 25.0% to 55.0% to the $11.52 December 2, 2024 closing price.	$14.40–$17.85

Aggregate fee of approximately $10 million, $2 million payable upon delivery of the opinion and the remainder contingent upon consummation of the merger. From November 2022 through October 2024 BofA derived approximately $1.2 million of revenues from Cross Country and approximately $1.6 million from Aya for corporate and/or investment banking services. BofA affiliates owned Cross Country shares worth approximately $4 million as of December 3, 2024. UBS Securities LLC also entitled to fees per merger agreement brokers representation.

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Management projections

Projection year	Year 1	Year 2	Year 3	Year 4	Year 5	CAGR
Revenue	$1.3B	$1.3B	$1.4B	$1.5B	$1.6B	5.1%
Revenue growth	-4.8%	6.1%	5.6%	5.1%	3.8%
EBITDA	$53.0M	$65.0M	$77.0M	$90.0M	$98.0M	16.6%
EBITDA growth	3.9%	22.6%	18.5%	16.9%	8.9%
EBITDA margin	4%	5%	5%	6%	6%
Implied EV / EBITDA	11.6x	9.5x	8.0x	6.8x	6.3x

Year-1 growth is against LTM at announcement ($1.3B revenue, $51.0M EBITDA); later years are year over year.

Cross Country management prepared standalone unaudited projections for calendar years 2024 through 2029, approved by the board for BofA Securities' use and also provided to Aya. Total revenue was projected at $1,344 million in 2024E declining to $1,270 million in 2025E and rising to $1,551 million in 2029E; Adjusted EBITDA of $51 million in 2024E, $53 million in 2025E, growing to $98 million in 2029E ($45 million to $88 million on an SBC-burdened basis). Unlevered free cash flow was projected at $13 million in 2025E rising to $39 million in 2029E.

Process notes

Single fairness opinion from BofA Securities to the Cross Country board; UBS Securities LLC was also disclosed as entitled to broker/finder fees but did not deliver an opinion. Selected publicly traded companies analysis used only one comparable, AMN Healthcare Services. Process began with an unsolicited Aya letter of intent on October 14, 2024 at approximately $608.6 million (~$18.00/share); Aya raised to $630 million, then cut to $608 million citing cash position/performance concerns, before parties settled at $615 million ($18.61 per share fully diluted) with a $20 million reverse termination fee (up from Aya's proposed $5 million). Aya guaranteed all of Parent's and Merger Sub's obligations. Merger consideration represents a premium to the $11.52 December 2, 2024 closing price but is below the $23.52 52-week high.

Other Outsourced Services fairness opinions

R1 RCM / TowerBrook and CD&R 2024 · 13.6x EV/EBITDA
Stericycle / Waste Management 2024 · 15.1x EV/EBITDA
Premier / Patient Square Capital 2025 · 10.9x EV/EBITDA
ProAssurance / The Doctors 2025 · 12.4x EV/EBITDA
Cross Country Healthcare / Knox Lane 2026 · 16.3x EV/EBITDA
Sharps Compliance / Aurora Capital Partners 2022 · 25.2x EV/EBITDA

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